Office of Investments Endowment Investment Management

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Spending Policy

Spending policy defines the size and fluctuation of the annual distribution from the pooled endowment that supports the university's operations and essential donor-specified functions. The goal of spending policy is to provide a consistent annual stream of distributions that keeps pace with academic inflation, while preserving a balance between support for today's students and support for future generations.

Distributions from pooled endowments to support donors' purposes are reviewed and may be reset annually, guided by the spending policy established by the Investment Committee of the Board of Trustees. These decisions are guided by the statutory requirements of UPMIFA (the Uniform Prudent Management of Institutional Funds Act, Ohio Revised Code sections 1715.51-1715.59).

The Investment Committee annually prepares a spending recommendation for the Finance Committee that is incorporated into the budget approval process. The Investment Committee strives to achieve an annual spending rate of between 4 percent and 6 percent of beginning market value consistent with expected growth of market value (from investment appreciation and new gifts) and the financial needs of the university.

The current spending policy is a hybrid with a "constant spending" component and a "market value" component.

Over a fiscal year, endowment assets distribute roughly 5 percent of their market value into the university's operating budget. In FY2010, this was about $69 million or about 8.3 percent of operating revenues distributed proportionately to the 2,300 individual endowment unit holders.

See the graph below that illustrates the endowment contribution to university operating income.